Being Bell: Getting it Wrong by Getting it Right

The term Philadelphia lawyer is used for the legalistic, loophole-seeking legalist who specializes in ensuring that legalism prevails over common sense and the intention of the law. Bell Canada apparently employs a regiment of such legalists.

Here’s the scheme:

Bell, through its Bell Mobility Inc. subsidiary, operates a wireless mobile telecommunications undertaking. It offers its services to the public, who subscribe to various of its voice and data plans in order to receive communications, including Internet games, documents, music and full video programming on their mobile devices. Subscribers can access Netflix, You Tube, and direct streaming services offered by broadcasters such as the CBC and PBS. So far all is clear: Bell Mobility is a telecommunications common carrier and is regulated under the Telecommunications Act, which mandates that similarly placed subscribers be charged the same rates for similar traffic. Bell Mobility is providing a telecommunications transport function for those seeking to access the Internet via their mobile devices. No dispute to this point.

Now here’s the wonderful part – an act of sheer legalistic genius that is worthy of a tax specialist: you add to Bell Mobility a tiny subdivision that aggregates television programming and transmits it to subscribers via the identical wireless network infrastructure and protocols as is used for its telecommunications common carrier functions and – wait for this – Bell Mobility is no longer a telecommunications common carrier but a broadcaster. In the mind of Bell, it is now free to offer subscribers to its Mobile TV service a real deal – they can pay $5 and consume data that, its other mobile service subscribers pay $40 for. Same infrastructure. Same protocols. Same software. Same programming. Same data consumption.

Under telecommunications rules, this is a no – no. Its called unjust discrimination or undue or unreasonable preference: one class of identically placed customers is being discriminated against to the advantage of another class (in this case, mobile TV subscribers).

No such doctrine applies in the Broadcasting Act.

By the magic of adding a video streaming service, Bell Mobility claims to have escaped the surly bonds of regulation, and is now free to have its ordinary data customers subsidize its mobile TV subscribers by having them pay up to 800% more for the same service.

One has to admit it is a bold scheme. Even bolder is that fact that if anyone was being treated unfairly, it was the Bell Mobility data subscribers.

The CRTC recently adjudicated the matter (decision CRTC 2015-26), and rejected the claim by Bell Mobility that its transmission function was, through the addition of video streaming content, converted into a broadcasting function. It found Bell Mobility had unjustly discriminated and ordered the discriminatory treatment of regular data subscribers cease.

Bell is appealing that decision. It is Bell’s appeal to the Federal Court of Appeal that is gaining ever more attention, as in its scorched earth approach, Bell is seeking costs (likely to be substantial) against the individuals, consumer groups and public advocacy groups that brought the case before the CRTC.

Ordinarily, a major player like Bell can be expected to take its lumps before its regulator. Bell conceived an audacious scheme and implemented it. It was caught out and reined in. Even if Bell is legally correct in its analysis, there are some fights that are not worth winning. This may be one of them.

The likely outcome of a successful appeal will be amendments to the Broadcasting Act to limit the jurisdiction of the CRTC over Internet streaming services. (This should be done no matter what the outcome of the appeal.) That would ensure consumers of telecommunications services are not subject to the caprices of broadcasting rules gamed by rent-seeking oligopolists. My prediction is that this Government would not let a successful Bell appeal stand. In that case, expect an amendment to the Broadcasting Act in the first Budget Implementation Act following the court’s decision.

In Bell’s defense, it has to be said that the CRTC is itself the author of much of this misfortune. It has consistently given the broadest possible interpretation to broadcasting, and this has led it to direct and indirect attempts to regulate Internet streaming services and apply the Broadcasting Act where it can serve no defensible public purpose (think of the CRTC – Google/Netflix tussle last fall). The CRTC has a long history of failing to see what impact its broadcasting decisions might have on telecommunications regulation. These failings have fed into the sharp minds and chiselled pencils of the legions of lawyers dutifully serving Bell to find ways to damage classes of its own customers.